us dollar

br Ever since the euro was introduced as a cash currency in 2002 , the United States dollar has steadily depreciated in value . United States budget deficits continually increased , which resulted in the euro beginning to rise in value . By the end of 2004 , the dollar had plummeted to new lows versus all major currencies . In the first quarter of 2004 , the dollar recovered minimally against the major currencies taking advantage of higher interest rates imposed the Federal Reserve However , all profits were lost in the third and fourth quarter of 2004 2005

was the only year since 2002 in which the dollar actually made progress versus the euro . When the Federal Reserve reduced interest rates on September 18 , 2007 , the dollar 's value dropped significantly to new record lows . Additionally the euro 's value increased considerably . Many economists suggest that its decreasing position as the world 's reserve currency is also a cause of the dollar 's spiral downward . Moreover , the Chinese yuan is becoming even more valuable which is not good news for the dollar . This could decrease its value significantly . In response to the decrease in value of U .S . currency officials in China indicated plans to diversify their 1 .45 trillion reserve . Most recently , in early March 2008 , the dollar descended to a new low point , after dreary reports on the U .S . economy and the prospect that the Federal Reserve will continue slashing interest rates

The weakening of the United States dollar doesn 't necessarily mean that others will gain . This could potentially weaken any economy that relies on exports from the United States . The real danger is that the dollar will weaken to the point that there will be an inclination to hold fewer dollars , which would further wear down the dollar 's value

The U .S . economy faces growing problems that reflect the diminished value of the dollar . The United States keeps up a sophisticated military with a global range which is very expensive . Governmental policy also focuses on maintaining consumer spending . This accounts for 70 percent of GDP . Balancing both of these dynamics is very difficult The military part of the equation increasingly weighs on the United States economy . The consumer spending portion has challenges such as household debt , an absence of fiscal policies in Washington , and a meltdown in housing . Consumers depended on home equity and low mortgage rates to finance their ongoing shopping binges . America 's household savings were driven into negative territory from the purchase of many imported goods . The sustainability of the US economy also hinge on the continual flow of foreign investment into US Treasury , federal agency and corporate bonds . These foreign acquisitions keep the credit flowing to consumers who purchase Asian and European merchandise . Despite worries over the decline of savings in the US and the extended period of record deficits , foreign central banks had an interest in defending this system , even with a steadily declining dollar . In a sense , foreign investors grant American consumers with cheap funds to buy their products - an ongoing cycle that maintains economic growth in the US and elsewhere . The declining dollar is a developing point of anxiety for many major international industrial companies that either export to the U .S . or assess their products in that currency . International businesses are starting to change from payments in the U .S . dollar to other currencies , in particular the euro , as the doubt surrounding the dollar makes it less appealing

Works Cited

(2008 , April 10 Who Gains When the Dollar Stinks (2008 , April 10 p...